Indirect tax

Indirect tax - Dutch Caribbean (Sint Maarten)

01 Jan 20257 min read

This tax guide provides an overview of the indirect tax system and rules to be aware of for doing business in Dutch Caribbean (Sint Maarten).

Indirect tax snapshot
What is the current rate of TOT?	Standard rate of 5% for realized revenues (on a cash basis) with the sale of goods or for providing services. Various exemptions are available, amongst which an exemption for a limited list of necessities (basic food products, water, electricity and cooking gas).
Are there any confirmed or anticipated changes to these rates?	Yes, the current separate levies of Room Tax and Car Rental Tax will be integrated into the TOT. At present, revenues over which Room Tax or Car Rental Tax have been paid, are exempt from TOT. Sint Maarten is in the process of redesigning its tax system. The Social Economic Council has advised to replace TOT with a tax levied on imports as well as services.
What is the principal indirect tax?	TOT is the principal indirect tax in Sint Maarten. The tax is levied from businesses and is collected on all business transactions. TOT charged to a business cannot be offset against the TOT payable on revenues .
Are non-resident businesses subject to TOT ?	Non-resident businesses that realize revenue within St. Maarten are subject to TOT and must register with the Inspectorate of Taxes. If these businesses fail to pay the tax, the liability is automatically transferred to the local customer/client, if the customer/client itself is a business. The transfer of liability can also be arranged by filing a request to do so, signed by supplier and customer/client.
How often do returns have to be submitted?	The TOT must be filed and paid monthly, on or before the 15^th of the month following the month over which the tax return is filed.
Are penalties imposed for the late submission of returns/payment of tax?	Yes. If a TOT return, or the corresponding payment, is submitted or paid late. In such case late filing and late payment penalties can be imposed (standard a 15% fine).
Are any other declarations required?	Yes. The Corporate Income Tax return includes a question for which the revenue as stated on the TOT returns is reconciled with the revenues as stated in the Financial Statements on which the Corporate Income Tax return is based.
Are penalties imposed in other circumstances?	Yes. When it is established that the business under reported and/or underpaid TOT penalties will be imposed.
Can the tax incurred by overseas businesses be claimed if they are not registered in your country?	No, the TOT is not a Value added tax, it is imposed on all levels of the supply chain, without compensation for TOT billed to the business.

Please click on each section to expand further:

What is the principal indirect tax?

Turnover Tax is the main type of indirect taxation in St. Maarten

It is a tax on consumption which is levied from businesses based on revenues realized with the supply of goods and services. It is not levied on imports.

A business subject to the tax will include TOT (output tax) in its sales price and incur TOT (input tax) on its purchases. As the TOT is levied from businesses throughout the supply chain, the input tax cannot be offset against the output tax. The tax payable is equal to the output tax.

A transaction is within the scope of St. Maarten TOT if the following conditions are met:

- it is a supply of goods or services.

- it takes place in St. Maarten

- it is made by an “entrepreneur”. The term entrepreneur includes any organization of labor and capital that partakes in the course of trade. In addition, it includes any person who exploits an asset for the purpose of (structurally) obtaining proceeds therefrom.

- it is made in the course or furtherance of any business carried on by that person or entity.

There is a standard rate of 5%. Some goods and services are exempted from the tax.

The TOT is not levied on imports and an export exemption may apply.

Registration for the tax?

Any person that qualifies as an entrepreneur must register for TOT purposes and file monthly tax returns, even if the taxable turnover is nil. In principle, non-resident businesses who realize turnover within St. Maarten are subject to the tax.

They are deemed to be domiciled at the Inspectorate of Taxes. Services are deemed to have been provided within St. Maarten if they are 'consumed' in St. Maarten. This means that, for instance, non-resident service providers of management services, consulting services or insurance coverage for St. Maarten based risks, provide these services in St. Maarten.

Certain types of delivery of goods, in which the ownership of these goods transfers from the vendor to the buyer when these goods are already in St. Maarten (for example, the delivery and installation of an elevator), are deemed to take place at the location where the goods are when this transfer occurs.

Transfer of obligation to pay tax of non-resident entrepreneurs?

Upon request, signed by both the supplier and the customer, a transfer of the liability to pay TOT is possible, on the condition that the customer is an entrepreneur. This transfer of TOT obligations, in the event the customer is an entrepreneur, also occurs in the event the non-resident supplier did not meet its obligations under the TOT regulations.

How often do returns have to be submitted?

TOT returns cover an accounting period of one month, ending on the last day of a calendar month. The tax return must be filed, and payment of the tax must be made, on or before the 15th of the following month. It is not possible to request extensions.

Are penalties imposed for the late submission of returns/ payment of tax?

A default surcharge penalty of 15% will be imposed by the tax authority if TOT returns are not submitted on time, or the related tax is not paid by the due date.

Are any other declarations required?

Resident businesses must provide a reconciliation of the turnover accounted for in the TOT returns with the gross revenues accounted for in the financial statements enclosed with the Corporate Income Tax return. As the tax is determined on a cash basis (on request the tax may be determined based on the invoice system), the increase/decrease of accounts receivable creates a difference between the TOT return and financial statement listed total revenues.

Are penalties imposed in other circumstances?

Yes. A range of penalties can be imposed where businesses do not comply with the TOT rules.

Civil penalties and interest can be applied for errors and omissions made on tax returns, or where the tax is paid late. Penalties can also be applied where the business has failed to maintain adequate records, provide information (including additional declarations), or makes repeated mistakes. In the event the quality of the administrative records is deemed to be insufficient, the Inspector of Taxes may reverse the burden of proof and estimate (within reason) the amount of tax to be paid.

Criminal proceedings may be brought in the case of more serious matters.

What information must a TOT invoice show?

Sint Maarten based persons and entrepreneurs are obliged to issue a consecutively numbered and dated invoice to the customer regarding their deliveries and services, which is stated in a clear and well-arranged manner. No detailed instructions for an invoice are available, as such this is a form-free design. Therefore, invoices (or ‘proof of payment’ or any other naming can be used) come in various types. However, at least the following items should be stated on an invoice:

the day on which the delivery or the service is performed.
name and address of the entrepreneur who provides the delivery or service.
the registration number assigned by the tax authorities (Sint Maarten) of the person who provides the delivery or service.
a clear description of the delivered goods or of the service provided.
the quantity of the delivered goods.
the compensation.
the amount of tax that has become due in respect of the delivery or the service. This is not required for Turnover Tax, and even discouraged in the past by the Minister.

There are no rules provided for invoices issued by non-resident persons and enterprises.